Drum Roll Please...Morningstar Announces Mutual Fund Managers of the Year for 2000

CHICAGO, Jan 03, 2001 – Morningstar, Inc., a leading provider of investment information and analytical tools, today announced its Mutual Fund Manager of the Year Award winners for 2000, recognizing outstanding portfolio managers in three categories: Domestic stock, fixed income, and international stock.

"Anyone can make money in a rally, but skilled managers steer clear of the worst damage and make it easier for investors to stick around for the next rally," said Russ Kinnel, director of fund analysis for Morningstar. "We chose these winners because they aren’t just good at selecting securities, they also do a good job of managing risk."

As investors fell in love with technology stocks, the managers of the Clipper Fund stuck with deep-value stocks, cash, and bonds, investing in companies such as Philip Morris and Fannie Mae. It lagged the SandP 500 index for four straight years. The fourth year, 1999, was the hardest: Clipper lost 2% as the SandP 500 gained more than 20%. Now, investors must be happy Clipper didn’t change its strategy: The fund gained 35% in 2000 even as the SandP 500 landed well in the red. It is now ahead of the index for the trailing three-, five-, 10-, and 15-year periods.

"Clipper’s methods are a bit unusual, but quite effective," Kinnel said. "They look for companies with strong franchises that are trading at a 30% discount to their intrinsic value. If nothing meets that criteria, they wait, which is good news for shareholders who have patiently stood by them."

Fixed-Income Fund Managers of the Year: PIMCO Total Return FundBill Gross and the PIMCO Team

Morningstar has never bestowed its Fund Manager of the Year award upon the same person more than once--until this year. Bill Gross, who was named Morningstar Fixed-Income Fund Manager of the Year for 1998, hit on all cylinders with his team last year and receives the same award for 2000.

PIMCO Total Return has beaten the Lehman Brothers Aggregate Index in 10 of the last 13 years. Over the past 10, it is leading the index by 1.2% per year. Making a smart call in early 2000, PIMCO bulked up on long-term Treasury bonds, correctly anticipating that the Treasury would begin buying back debt. Even more impressive was the decision to scale back on corporate bonds, which Gross and his team expected to lag. As a result, PIMCO Total Return was one of the best-performing funds in its category in 2000.

"PIMCO’s strong performance doesn’t just reflect good calls, it reflects the team’s success with risk controls that keep portfolios from making dangerous bets," Kinnel noted. "Nearly 40 bond funds lost more than 10% in 2000. It’s clear that more than a few basis points are at stake, and PIMCO has overcome hurdles that dog other funds."

In a terrible year for international funds, Tweedy Browne Global Value eked out a respectable 10 percent gain, beating almost all its rivals. Moreover, the fund’s buy-and-hold strategy has produced strong tax efficiency.

The long-term record is stunning: Over the past seven years, the fund has produced an annualized return of 16.19%, compared with 10.33 percent for the average foreign-stock fund.

"Clearly this team is more interested in producing solid returns without taking on too much risk rather than following what’s trendy," Kinnel said. "The fund is the Energizer bunny: It just keeps going and going and going. The team’s sharp stock picks, such as Pharmacia, Nestle, and the Japanese drugmaker Shionogi, have made great gains for investors."

Established in 1988, the Morningstar Fund Manager of the Year Awards recognize portfolio managers who demonstrate excellent investment skill and the courage to differ from consensus. Not only should they have had a great year, but they must also have the commitment to deliver outstanding long-term performance to shareholders. The Morningstar Fund Manager of the Year Award winners are chosen based upon the company’s own research and in-depth evaluation by its senior editorial staff.

About Morningstar, Inc.Chicago-based Morningstar, Inc. is an independent provider of reliable, unbiased investment information. Morningstar.com is listed among the top investing sites by publications such as The Wall Street Journal, Barron’s, SmartMoney, Money, Worth, and U.S. News and World Report. Morningstar provides investment information for a number of leading Web sites, including Microsoft MoneyCentral, Quicken.com, America Online, Yahoo! Finance, and Netscape Personal Finance.